Himachal Pradesh Budget Analysis

2021-22
The Chief Minister of Himachal Pradesh, Mr. Jai Ram Thakur, presented the Budget for the state for the financial
year 2021-22 on March 6, 2021. Due to the impact of COVID-19, 2020-21 was not a standard year with respect to
the performance of the economy and government finances. In this note, 2021-22 budget estimates have been
compared to the actuals for 2019-20 (in terms of compounded annual growth rate or CAGR). A comparison of the
revised estimates for 2020-21 and budget estimates for 2021-22 has been provided in the Annexure.
Budget Highlights
 The Gross State Domestic Product (GSDP) of Himachal Pradesh for 2021-22 (at current prices) is
projected to be Rs 1,72,174 crore. This is an annual increase of 3% over the GSDP in 2019-20. As per the
revised estimates, in 2020-21, GSDP is estimated to contract by 3.9% over the previous year (as compared
to a growth of 10% estimated at the budget stage).
 Total expenditure for 2021-22 is estimated to be Rs 50,192 crore, an annual increase of 8% over the actual
expenditure in 2019-20. As per the revised estimates, total expenditure in 2020-21 is estimated to be 9%
higher than the budget estimate (an increase of Rs 4,329 crore).
 Total receipts (excluding borrowings) for 2021-22 are estimated to be Rs 37,069 crore, an annual increase
of 10% over the actual receipts in 2019-20. In 2020-21, total receipts (excluding borrowings) are estimated
to fall short of the budget estimate by Rs 2,846 crore (a decrease of 7%).
 Revenue deficit in 2021-22 is estimated to be Rs 1,463 crore, which is 0.85% of the GSDP. In 2020-21
(revised estimate), the state has estimated a revenue deficit of Rs 423 crore (0.27% of GSDP).
 Fiscal deficit in 2021-22 is estimated to be Rs 7,789 crore (4.52% of GSDP). As per revised estimates, in
2020-21, fiscal deficit is estimated to be 4.12% of GSDP, higher than the budget estimate of 4% of GSDP.
Policy Highlights
 New policies: To promote forest conservation, a new policy will be formulated for increasing the survival
percentage of new plantations and ensuring accountability. The state government will formulate the
Swaran Jayanti Energy Policy in 2021-22 for the promotion of the energy sector.
 Agriculture: Legal framework will be amended to permit the marketing and trading of flowers through
APMC Mandis. Swaran Jayanti Paramparagat Beej Suraksha Samvardhan Yojana will be started for the
conservation and propagation of traditional seeds in the state. A research and development fund with an
initial corpus of five crore rupees will be created for the agriculture and horticulture universities of the state.
 Digitalisation of government services: An integrated beneficiary database management system will be
developed for the proper selection of beneficiaries under various schemes. 80 government services will be
integrated with Himachal Pradesh Online Portal and made available through Lok Mitra Kendras.
 Increase in honorarium: The honorarium for ASHA workers will be increased by Rs 750 per month. The
honorarium for anganwadi workers, mini-anganwadi workers, and anganwadi helpers will be increased by
Rs 500, Rs 300, and Rs 300 per month, respectively.

Himachal Pradesh’s Economy

Figure 1: Growth in GSDP and sectors in
 GSDP: The growth rate of Himachal Pradesh’s GSDP (at Himachal Pradesh at constant prices
constant prices) was 5.6% in 2019-20, lower than the (2011-12)
growth rate in 2018-19 (7.1%). 15%
9.3%

8.6%
8.6%
8.0%

7.1%
6.8%
6.7%


5.9%

5.6%

Sectors: In 2019-20, the contribution of agriculture, 10%

3.9%

manufacturing, and services sectors to the economy was

5%
13%, 47%, and 41%, respectively.
0%
 Per capita GSDP: The per capita GSDP of Himachal
-1.7%

-5%
-1.8%

Pradesh in 2019-20 (at constant prices) was Rs 1,69,787,

4.9% higher than the corresponding figure in 2018-19. Agriculture Manufacturing Services GSDP
 Unemployment: According to the Periodic Labour Force 2017-18 2018-19 2019-20
Survey (July 2018-June 2019), the unemployment rate in Note: These numbers are as per constant prices which
the state was 5.2%, lower than the all-India level (5.8%). implies that the growth rate is adjusted for inflation.
Sources: MoSPI; PRS.

Saket Surya
saket@prsindia.org March 15, 2021
PRS Legislative Research  Institute for Policy Research Studies 
3rd Floor, Gandharva Mahavidyalaya  212, Deen Dayal Upadhyaya Marg  New Delhi – 110002
Tel: (011) 4343 4035, 2323 4801  www.prsindia.org
 Himachal Pradesh Budget Analysis 2021-22 PRS Legislative Research

Budget Estimates for 2021-22

 Total expenditure in 2021-22 is estimated to be Rs 50,192 crore. This is an annual increase of 8% over the
actual expenditure in 2019-20. This expenditure is proposed to be met through receipts (other than
borrowings) of Rs 37,069 crore and borrowings of Rs 11,731 crore. Total receipts for 2021-22 (other than
borrowings) are expected to register an annual increase of 10% over 2019-20.
 For 2021-22, the state has estimated a fiscal deficit of 4.52% of GSDP. This is higher than the 4% limit
allowed by the central government for fiscal deficit of states in 2021-22. In 2021-22, the state estimates a
revenue deficit of Rs 1,463 crore. In comparison, the state had observed a revenue surplus in 2019-20 (Rs
12 crore).
 As per the revised estimates for 2020-21, the receipts (other than borrowings) are estimated to be 7% less
than the budget estimate, while the total expenditure is estimated to be 9% higher. In 2020-21, Himachal
Pradesh is estimated to have a revenue deficit of Rs 423 crore (0.27% of GSDP). In 2020-21 (as per revised
estimate), the fiscal deficit is estimated to be 4.12% of GSDP, which is lower than the 5% limit allowed by
the central government for the fiscal deficit of states in 2020-21.
Table 1: Budget 2021-22 - Key figures (in Rs crore)
% change from Annualised
2019-20 2020-21 2020-21 2021-22
Items BE 2020-21 to Change (2019-20
Actuals Budgeted Revised Budgeted
RE 2020-21 to 2021-22 BE)
Total Expenditure 43,063 49,131 53,460 9% 50,192 8%
A. Receipts (except borrowings) 30,765 38,465 35,619 -7% 37,069 10%
B. Borrowings 10,847 7,554 15,556 106% 11,731 4%
Total Receipts (A+B) 41,613 46,019 51,175 11% 48,800 8%
Revenue Balance 12 -684 -423 -38% -1,463 -
As % of GSDP 0.01% -0.38% -0.27% -0.85%
Fiscal Deficit 5,597 7,272 6,445 -11% 7,789 18%
As % of GSDP 3.44% 4.00% 4.12% 4.52%
Primary Deficit 1,363 2,340 1,822 -22% 2,772 43%
As % of GSDP 0.84% 1.29% 1.16% 1.61%
Note: BE is Budget Estimates; RE is Revised Estimates. A negative Revenue Balance indicates a deficit.
Sources: Himachal Pradesh Budget Documents 2021-22; PRS.

Expenditure in 2021-22
 Capital expenditure for 2021-22 is proposed to be Rs 11,701 crore, which is an annual decrease of 3%
over 2019-20. Capital expenditure includes expenditure affecting the assets and liabilities of the state, such
as: (i) capital outlay, i.e., expenditure which leads to the creation of assets (such as bridges and hospitals),
and (ii) repayment and grant of loans by the state government. The capital outlay in 2021-22 (Rs 6,013
crore) is estimated to increase at an annualised rate of 8% over 2019-20.
 Revenue expenditure for 2021-22 is proposed to be Rs 38,491 crore, which is an annual increase of 12%
over 2019-20. This includes expenditure such as payment of salaries, pensions, interest, and subsidies.
 As per revised estimates, in 2020-21, while revenue expenditure is estimated to be 8% lower than the
budget estimate, capital outlay is estimated to be 9% less. Debt repayment in 2020-21 at the revised stage
is estimated to be Rs 11,396 crore, significantly higher (236%) than the budget estimate of Rs 3,394 crore.
This has led to a substantial increase in capital expenditure (74%) from the budget to the revised stage in
2020-21.
Table 2: Expenditure budget 2021-22 (in Rs crore)
2019-20 2020-21 2020-21 % change from BE 2021-22 Annualised Change
Items
Actuals Budgeted Revised 2020-21 to RE 2020-21 Budgeted (2019-20 to 2021-22 BE)
Capital Expenditure 12,333 10,008 17,449 74% 11,701 -3%
of which Capital Outlay 5,174 6,255 5,692 -9% 6,013 8%
Revenue Expenditure 30,730 39,123 36,011 -8% 38,491 12%
Total Expenditure 43,063 49,131 53,460 9% 50,192 8%
A. Debt Repayment 6,701 3,394 11,396 236% 5,334 -11%
B. Interest Payments 4,234 4,932 4,623 -6% 5,018 9%
Debt Servicing (A+B) 10,935 8,325 16,019 92.4% 10,351 -3%
Note: BE is Budget Estimates; RE is Revised Estimates. Capital outlay denotes expenditure that leads to the creation of assets.
Sources: Himachal Pradesh Budget Documents 2021-22; PRS.

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Sectoral expenditure in 2021-22

The sectors listed below account for 60% of the total expenditure on sectors by the state in 2021-22. A
comparison of Himachal Pradesh’s expenditure on the key sectors with that by other states can be found in
Annexure 1.
Table 3: Sector-wise expenditure under Himachal Pradesh Budget 2021-22 (in Rs crore)
Annualised
2019-20 2020-21 2020-21 2021-22 Change
Sector Budget provisions 2021-22
Actuals BE RE BE (2019-20 to
2021-22 BE)
 Rs 289 crore has been allocated towards Sarva
Education, Sports, Shiksha Abhiyaan.
6,423 8,304 7,523 8,272 13%
Arts, and Culture  Rs 81 crore has been allocated towards the Mid-Day
Meal Scheme.
 Capital outlay of Rs 1,989 crore has been proposed
Roads and Bridges 3,751 3,986 4,313 4,046 4%
for the construction of roads and bridges.
Health and Family  Rs 339 crore has been allocated towards National
2,307 2,976 2,953 2,976 14%
Welfare Rural Health Mission.
Agriculture and Allied  Rs 154 crore has been allocated towards food
2,291 2,856 2,677 2,730 9%
Activities subsidies.
 Rs 1,138 crore has been allocated towards the rural
Water Supply and water supply programme.
1,541 2,357 2,080 2,243 21%
Sanitation  Rs 457 crore has been allocated towards the urban
water supply programme.
 Rs 674 crore has been allocated towards pension
Social Welfare and under social security schemes.
2,022 1,965 2,055 2,128 3%
Nutrition  Rs 200 crore has been allocated towards integrated
child care services.
 Rs 784 crore has been allocated towards the district
Police 1,205 1,541 1,501 1,527 13%
police.
 Rs 260 crore has been allocated towards
MGNREGS.
Rural Development 1,212 1,739 1,475 1,377 7%
 Rs 105 crore has been allocated towards the
SwarnaJayanti Gram Swarojgar Yojana.
Irrigation and Flood  Capital outlay of Rs 378 crore has been proposed on
1,100 1,042 823 842 -13%
Control various projects for irrigation and flood control.
 Rs 168 crore has been allocated towards assistance
to municipalities and municipal council.
Urban Development 524 763 841 728 18%
 Rs 74 crore has been allocated towards Smart City
Mission.
% of total
expenditure on all 62% 61% 63% 60% -2%
sectors
Sources: Himachal Pradesh Budget Documents 2021-22; PRS.

Committed expenditure: Committed expenditure of a state includes expenditure on payment of salaries,

pensions, and interest. A larger proportion of the budget allocated for committed expenditure items limits the
state’s flexibility to decide on other expenditure priorities such as capital outlay. In 2021-22, Himachal Pradesh
is estimated to spend Rs 26,503 crore on committed expenditure, which is 72% of its revenue receipts. On
average, states spend 50% of their revenue receipts on committed expenditure. Committed Expenditure of
Himachal Pradesh in 2021-22 comprises spending on salaries (39% of revenue receipts), pension (19% of
revenue receipts), and interest payments (14% of revenue receipts). In 2021-22, committed expenditure is
estimated to increase at an annual rate of 11% over the actual expenditure in 2019-20.
Table 4: Committed Expenditure in 2021-22 (in Rs crore)
% change from Annualised
2019-20 2020-21 2020-21 2021-22
Items BE 2020-21 to Change (2019-20
Actuals BE RE BE
RE 2020-21 to 2021-22 BE)
Salaries 11,669 14,836 13,231 -11% 14,403 11%
Pensions 5,490 7,266 6,000 -17% 7,082 14%
Interest 4,234 4,932 4,623 -6% 5,018 9%
Total Committed Expenditure 21,393 27,034 23,854 -12% 26,503 11%
Sources: Himachal Pradesh Budget Documents 2021-22; PRS.

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Receipts in 2021-22
 Total revenue receipts for 2021-22 are estimated to be Rs 37,028 crore, an annual increase of 10% over
the actual receipts in 2019-20. Of this, Rs 12,036 crore (33%) will be raised by the state through its own
resources, and Rs 24,992 crore (67%) will come from the Centre. Resources from the Centre will be in
the form of the state’s share in central taxes (15% of revenue receipts) and grants (53% of revenue receipts).
 Devolution: In 2021-22, receipts from the state’s share in central taxes are estimated to be Rs 5,524 crore,
an annual increase of 9% over 2019-20. In 2020-21, devolution is estimated to be 30% less than budgeted.
This may be due to a 30% cut in the union budget for devolution to states, from Rs 7,84,181 crore at the
budgeted stage to Rs 5,49,959 crore at the revised stage.
 State’s own tax revenue: Total own tax revenue of Himachal Pradesh is estimated to be Rs 9,282
crore in 2021-22, an annual increase of 10% over 2019-20. The growth rate for own tax revenue is
estimated to be higher than the growth rate for GSDP (3%). Hence, the own tax to GSDP ratio is
estimated to increase from 4.7% in 2019-20 to 5.4% in 2021-22.
Table 5: Break up of state government receipts (in Rs crore)
% change from Annualised
2019-20 2020-21 2020-21 2021-22
Items BE 2020-21 to Change (2019-20
Actuals BE RE BE
RE 2020-21 to 2021-22 BE)
State's Own Tax 7,624 9,090 7,917 -13% 9,282 10%
State's Own Non-Tax 2,502 2,410 2,268 -6% 2,754 5%
Share in Central Taxes 4,678 6,266 4,394 -30% 5,524 9%
Grants-in-aid from Centre 15,940 20,673 21,009 2% 19,468 11%
Total Revenue Receipts 30,742 38,439 35,588 -7% 37,028 10%
Borrowings 10,847 7,554 15,556 106% 11,731 4%
Other receipts 23 26 31 18% 41 33%
Total Capital Receipts 10,870 7,580 15,587 106% 11,772 4%
Total Receipts 41,613 46,019 51,175 11% 48,800 8%
Note: BE is Budget Estimates; RE is Revised Estimates.
Sources: Himachal Pradesh Budget 2021-22; PRS.

 In 2021-22, SGST collection is GST Compensation

estimated to be Rs 4,142 crore, an The GST (Compensation to States) Act, 2017 guarantees states
annual increase of 8% over the actual compensation for five years (till 2022) for any revenue loss arising due to
SGST collected in 2019-20. SGST is GST implementation. The Act guarantees states a 14% annual growth in
estimated to be the largest source of the their GST revenue, failing which compensation grants are provided to states
state’s own tax revenue (45%) in 2021- to meet the shortfall. These grants are funded through the GST
22. In 2020-21, SGST is estimated to compensation cess levied by the centre. As the cess collection is not
be 10% lower than the budget estimate. sufficient to meet the compensation requirement of states in 2020-21, a part
of their requirement will be met through loans from the centre (which will be
 In 2021-22, Himachal Pradesh is repaid using future cess collection). As per the revised estimate, Himachal
expected to generate Rs 1,643 crore Pradesh is estimated to receive Rs 3,546 crore as GST compensation
through Sales Tax and VAT, an annual grants. Estimates of GST compensation loans have not been provided.
increase of 19% over 2019-20. In However, as per a press release by the Union Finance Ministry, Rs 1,651
2021-22, taxes and duties on electricity crore has been availed by Himachal Pradesh as GST compensation loan.
and land revenue are estimated to be The state estimates to receive Rs 3,834 crore as GST compensation grants
more than twice the 2019-20 level. for the year 2021-22, which is more than double the amount of compensation
received in 2019-20 (Rs 1,877 crore). In 2021-22, GST compensation grants
 As per revised estimates, in 2020-21, a are estimated to comprise 10% of the revenue receipts. GST compensation
higher shortfall is estimated in stamps grants are set to be discontinued after June 2022. This could create a
duty and registration fees (28%) as notable gap in the revenue receipts of the state going forward.
compared to other own tax sources.
Table 6: Some of the major state’s own tax revenue sources (in Rs crore)
% change from Annualised % of Revenue
2019-20 2020-21 2020-21 2021-22
Head BE 2020-21 to Change (2019-20 Receipts in
Actuals BE RE BE
RE 2020-21 to 2021-22 BE) 2021-22
State GST 3,550 3,855 3,451 -10% 4,142 8% 11%
Sales Tax/ VAT 1,170 1,685 1,467 -13% 1,643 19% 4%
State Excise 1,660 1,788 1,624 -9% 1,868 6% 5%
Taxes on Vehicles 466 457 372 -19% 488 2% 1%
Stamps Duty and Registration Fees 260 328 235 -28% 311 9% 1%
Taxes and Duties on Electricity 101 403 403 0% 431 107% 1%
Land Revenue 5 18 22 21% 23 118% 0%
GST Compensation Grants 1,877 3,338 3,546 6% 3,834 43% 10%
Sources: Himachal Pradesh Budget Documents 2021-22; PRS.

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Deficits, Debts, and FRBM Targets for 2021-22

The Himachal Pradesh Fiscal Responsibility and Budget Management (FRBM) Act, 2005 provides annual targets to
progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government.
Revenue Balance: It is the difference between revenue expenditure and revenue receipts. A revenue deficit implies
that the government needs to borrow to finance its expenses which do not increase its assets or reduces its liabilities.
Once the revenue deficit is accounted for, only then the borrowings can be used for capital investments. A revenue
surplus implies that the revenue receipts of the state are sufficient to meet the revenue expenditure requirements.
The state estimates a revenue deficit of Rs 1,463 crore (0.85% of the GSDP) in 2021-22. This is after accounting for
post-devolution revenue deficit grants worth Rs 10,249 crore in 2020-21 that the state is estimated to receive as per
recommendations of the 15th Finance Commission. In comparison, the state had observed a revenue surplus of Rs
12 crore (0.01% of GSDP) in 2019-20. As per the medium-term fiscal plan, the revenue deficit is estimated to rise
to 1.42% of GSDP by 2024-25.
Fiscal deficit: It is the excess of total expenditure Fiscal Roadmap for 2021-26
over total receipts. This gap is filled by borrowings
by the government and leads to an increase in total The 15th Finance Commission recommended the following fiscal
deficit targets for states for the 2021-26 period (as a % of GSDP):
liabilities. In 2021-22, the fiscal deficit is estimated
(i) 4% for 2021-22, (ii) 3.5% for 2022-23, and (iii) 3% for 2023-26.
to be Rs 7,789 crore (4.52% of GSDP). This is The Commission estimates that this path will enable Himachal
higher than the 4% limit allowed by the central Pradesh to bring down its total liabilities from 39.8% of GSDP in
government for the fiscal deficit of states in 2021-22. 2020-21 to 34.7% of GSDP at the end of 2025-26.
States have been allowed a higher fiscal deficit than
If a state is unable to fully utilise the sanctioned borrowing limit as
the usual 3% limit under the FRBM Act for
specified above in any of the first four years (2021-25), it can avail
undertaking increased expenditure to support the unutilised borrowing amount in subsequent years (within the
economic recovery. As per the medium-term fiscal 2021-26 period). An additional borrowing worth 0.5% of GSDP
plan, the fiscal deficit of the state is estimated to be will be allowed each year for the first four years (2021-25) upon
higher than 4.5% in all three years between 2022-25. undertaking certain power sector reforms including: (i) reduction
in operational losses, (ii) reduction in revenue gap, (iii) reduction
Enhanced borrowing limit in 2020-21: Given the in payment of cash subsidy by adopting direct benefit transfer,
situation due to COVID-19, the central government and (iv) reduction in tariff subsidy as a percentage of revenue.
permitted states to increase their fiscal deficit up to
5% of GSDP in 2020-21. All states are allowed to increase their fiscal deficit up to 4% of GSDP. The
remaining 1% of GSDP is conditional on the implementation of reforms by states in the following areas (0.25%
of GSDP for each reform): (i) one nation one ration card, (ii) ease of doing business, (iii) urban local body/
utility, and (iv) power distribution. As of February 19, 2021, Himachal Pradesh has completed only the Ease of
Doing Business reform, and consequently is eligible to borrow Rs 438 crore.
Outstanding liabilities: Outstanding liabilities are the accumulation of total borrowings (including any
liabilities on public accounts) at the end of a financial year. The outstanding liabilities are estimated to increase
from 33.98% of GSDP in 2018-19 to 40.26% of GSDP in 2021-22.

Figure 2: Revenue and Fiscal Balance (% of GSDP) Figure 3: Outstanding Liabilities targets (as % of
3% 2.34% GSDP)
2% 1.02% 50%
1% 0.01% 39.33% 40.26% 40.60% 39.91% 39.28%
0% 40% 33.98% 34.46%
-1% -0.27%
-2% -0.85% -1.03% -1.22% 30%
-1.42%
-3%
-4% -3.44%
20%
-5% -4.12% -4.52%
-6% -4.67% -4.82% -4.98% 10%
2018-19

2019-20

2022-23

2023-24

2024-25
2021-22 BE
2020-21 RE

0%
2018-19

2019-20

2022-23

2023-24

2024-25
2021-22 BE
2020-21 RE

Revenue Balance Fiscal Balance

Note: RE is Revised Estimates; BE is budget estimates. Negative sign
indicates a deficit, positive sign indicates a surplus. Numbers for 2018-
19 and 2019-20 are actuals. Numbers for 2022-23, 2023-24, and 2024-
25 are projections.
Sources: Himachal Pradesh Budget Documents 2021-22; PRS.
Note: RE is Revised Estimates; BE is budget estimates. Numbers for
2018-19 and 2019-20 are actuals. Numbers for 2022-23, 2023-24,
and 2024-25 are projections.
Sources: Himachal Pradesh Budget Documents 2021-22; PRS.

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Annexure 1: Comparison of states’ expenditure on key sectors

The graphs below compare Himachal Pradesh’s expenditure on six key sectors as a proportion of its total
expenditure on all sectors. The average for a sector indicates the average expenditure in that sector by 30 states
(including Himachal Pradesh) as per their budget estimates of 2020-21.1
 Education: Himachal Pradesh has allocated 18.6% of its total expenditure for education in 2021-22. This
is higher than the average allocation (15.8%) for education by all states (2020-21 BE).
 Health: Himachal Pradesh has allocated 6.7% of its total expenditure on health, which is higher than the
average allocation for health by states (5.5%).
 Agriculture: The state has allocated 6.1% of its total expenditure towards agriculture and allied activities.
This is lower than the average allocation for agriculture by states (6.3%).
 Rural development: Himachal Pradesh has allocated 3.1% of its expenditure on rural development. This
is significantly lower than the average allocation for rural development by states (6.1%).
 Police: Himachal Pradesh has allocated 3.4% of its total expenditure on police, which is lower than the
average expenditure on police by states (4.3%).
 Roads and bridges: Himachal Pradesh has allocated 9.1% of its total expenditure on roads and bridges,
which is significantly higher than the average allocation by states (4.3%).

Spending on education as a Spending on health as a % of Spending on agriculture as a

% of total expenditure total expenditure % of total expenditure
20% 17.9% 18.3% 18.0% 18.6% 8% 6.4% 6.6%
7.1% 6.7% 8%
15.8% 6.4% 6.3% 6.4% 6.1% 6.3%
5.5%
15% 6% 6%
10% 4% 4%
5% 2% 2%
0% 0% 0%
2019-20

2019-20
2020-21 (RE)

2020-21 (RE)
2020-21 (BE)

2021-22 (BE)

2020-21 (BE)

2021-22 (BE)
Average of all states

Average of all states

2019-20

2020-21 (RE)
2020-21 (BE)

2021-22 (BE)
Average of all states
(2020-21 BE)

(2020-21 BE)

Spending on rural Spending on police as a % of Spending on roads and (2020-21 BE)

development as a % of total total expenditure bridges as a % of total
expenditure expenditure
8%
8% 12% 10.4% 10.3%
6.1% 8.8% 9.1%
6% 4.3%
3.4% 3.4% 3.6% 3.4% 8%
4% 3.4% 3.8% 3.5% 3.1% 4%
4.3%
4%
2%
0% 0% 0%
2019-20

2020-21 (RE)

2019-20

2020-21 (RE)

2019-20

2020-21 (RE)
2020-21 (BE)

2021-22 (BE)

2020-21 (BE)

2021-22 (BE)

2020-21 (BE)

2021-22 (BE)
Average of all states

Average of all states

Average of all states

(2020-21 BE)

(2020-21 BE)

(2020-21 BE)

Note: 2019-20, 2020-21 (BE), 2020-21 (RE), and 2021-22 (BE) figures are for Himachal Pradesh.
Sources: Himachal Pradesh Budget Documents 2021-22; various state budgets; PRS.

1
The 30 states include the Union Territory of Delhi and Union Territory of Jammu and Kashmir.

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Annexure 2: Recommendations of the 15th Finance Commission for 2021-26

The 15th Finance Commission’s (FC) report for the 2021-26 period was released on February 1, 2021. For the
2021-26 period, the Commission has recommended the share of states in the divisible pool of central taxes to be
41%, same as that for 2020-21 (also recommended by the 15th FC in its report for 2020-21). This is 1% point
lower than the 42% share recommended by the 14th FC (for the 2015-20 period) to separately provide funds for
the newly formed union territories of Jammu and Kashmir and Ladakh. The 15th FC proposed revised criteria
for determining the share of individual states (different from 14th FC). Based on the 15th FC’s recommendations
for the period 2021-26, Himachal Pradesh will have a 0.34% share in the divisible pool of central taxes. This
implies that out of every Rs 100 of revenue in the divisible pool during the 2021-26 period, Himachal Pradesh
will receive Rs 0.34.
Table 7: Share of states in the divisible pool of central taxes under the 14th and 15th FC periods
14th FC 15th FC 15th FC % change
State 2015-20 2020-21
2015-20 2020-21 2021-26
to 2021-26 to 2021-26
Andhra Pradesh 1.81 1.69 1.66 -8.2% -1.6%
Arunachal Pradesh 0.58 0.72 0.72 25.2% -0.2%
Assam 1.39 1.28 1.28 -7.8% -0.1%
Bihar 4.06 4.13 4.12 1.6% 0.0%
Chhattisgarh 1.29 1.40 1.40 8.0% -0.3%
Goa 0.16 0.16 0.16 -0.3% 0.0%
Gujarat 1.30 1.39 1.43 10.1% 2.4%
Haryana 0.46 0.44 0.45 -1.6% 1.0%
Himachal Pradesh 0.30 0.33 0.34 13.6% 3.9%
Jammu & Kashmir 0.78 - - - -
Jharkhand 1.32 1.36 1.36 2.8% -0.2%
Karnataka 1.98 1.50 1.50 -24.5% 0.0%
Kerala 1.05 0.80 0.79 -24.8% -0.9%
Madhya Pradesh 3.17 3.23 3.22 1.5% -0.5%
Maharashtra 2.32 2.52 2.59 11.7% 3.0%
Manipur 0.26 0.29 0.29 13.3% -0.3%
Meghalaya 0.27 0.31 0.31 16.6% 0.3%
Mizoram 0.19 0.21 0.21 6.1% -1.2%
Nagaland 0.21 0.24 0.23 11.5% -0.7%
Odisha 1.95 1.90 1.86 -4.8% -2.2%
Punjab 0.66 0.73 0.74 11.9% 1.1%
Rajasthan 2.31 2.45 2.47 7.1% 0.8%
Sikkim 0.15 0.16 0.16 3.2% 0.0%
Tamil Nadu 1.69 1.72 1.67 -1.0% -2.6%
Telangana 1.02 0.88 0.86 -15.8% -1.5%
Tripura 0.27 0.29 0.29 7.7% -0.1%
Uttar Pradesh 7.54 7.35 7.36 -2.5% 0.0%
Uttarakhand 0.44 0.45 0.46 3.7% 1.3%
West Bengal 3.08 3.08 3.08 0.3% 0.1%
Total 42.00 41.00 41.00
Note: Although the 15th FC recommended the same criteria for the 2020-21 and 2021-26 periods, the reference period for computation on
some underlying indicators are different. This is why the share in the divisible pool in 2020-21 and 2021-26 differ for states. % share in the
divisible pool has been rounded off up to two decimal places.
Sources: Reports of 14th and 15th Finance Commissions; PRS.

The 15th FC recommended grants worth Rs 10.3 lakh Table 8: Grants recommended for 2021-26 (Rs crore)
crore for states over five years (see Table 8). A Himachal
Grants Total
portion of these grants will be conditional. 17 states Pradesh
will receive revenue deficit grants during this period. Revenue deficit grants 2,94,514 37,199
Sector-specific grants include grants for sectors such Local governments grants 4,36,361 3,049*
as health, agriculture, and education. Grants to local Sector-specific grants 1,29,987 2,987#
governments include: (i) Rs 1.2 lakh crore for urban Disaster management grants 1,22,601 2,258
State-specific grants 49,599 1,420
local bodies, (ii) Rs 2.4 lakh crore for rural local
Total 10,33,062 46,913
bodies, and (iii) health grants worth Rs 70,000 crore Note: This does not include competition-based grants including *grants
through local bodies for healthcare infrastructure. for incubation of new cities (part of local bodies grants), and #grants for
school education, and aspirational districts and blocks.
Grants recommended for Himachal Pradesh include: Source: Report of 15th FC; PRS.
(i) Rs 37,199 crore as revenue deficit grants, (ii) Rs
3,049 crore as grants for local bodies, and (iii) Rs
1,420 crore as state-specific grants for purposes

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 Himachal Pradesh Budget Analysis 2021-22 PRS Legislative Research

including expansion and upgradation of Kangda airport, construction of Mandi airport (Nagchalla), and
upgradation and development of Jawalamukhi.

Table 9: Taxes devolved to states as per Union Budget 2021-22 (in Rs crore)
2020-21 2021-22
State 2019-20
Revised Budget
Andhra Pradesh 29,421 22,611 26,935
Arunachal Pradesh 9,363 9,681 11,694
Assam 22,627 17,220 20,819
Bihar 66,049 55,334 66,942
Chhattisgarh 21,049 18,799 22,676
Goa 2,583 2,123 2,569
Gujarat 21,077 18,689 23,148
Haryana 7,408 5,951 7,275
Himachal Pradesh 4,873 4,394 5,524
Jammu & Kashmir 12,623 -38 -
Jharkhand 21,452 18,221 22,010
Karnataka 32,209 20,053 24,273
Kerala 17,084 10,686 12,812
Madhya Pradesh 51,584 43,373 52,247
Maharashtra 37,732 33,743 42,044
Manipur 4,216 3,949 4,765
Meghalaya 4,387 4,207 5,105
Mizoram 3,144 2,783 3,328
Nagaland 3,403 3,151 3,787
Odisha 31,724 25,460 30,137
Punjab 10,777 9,834 12,027
Rajasthan 37,554 32,885 40,107
Sikkim 2,508 2,134 2,582
Tamil Nadu 27,493 23,039 27,148
Telangana 16,655 11,732 13,990
Tripura 4,387 3,899 4,712
Uttar Pradesh 1,22,729 98,618 1,19,395
Uttarakhand 7,189 6,072 7,441
West Bengal 50,051 41,353 50,070
Total 6,83,353 5,49,959 6,65,563
Note: Actuals for 2019-20 and Revised Estimates for 2020-21 have been reported in the Union Budget after adjusting for excess or less
devolution in previous years.
Source: Union Budget Documents 2021-22; PRS.

Annexure 3: Comparison of 2020-21 Revised and 2021-22 Budget Estimates

The following tables compare the budget estimates for 2021-22 with the revised estimates for 2020-21.
Table 10: Overview of Revised Estimates for 2020-21 and Budget Estimates for 2021-22 (in Rs crore)
Particular 2020-21 RE 2021-22 BE % change from 2020-21 RE to 2021-22 BE
Receipts (1+2) 51,175 48,800 -5%
Receipts except Borrowings 35,619 37,069 4%
1. Revenue Receipts (a+b+c+d) 35,588 37,028 4%
a. Own Tax Revenue 7,917 9,282 17%
b. Own Non-Tax Revenue 2,268 2,754 21%
c. Share in central taxes 4,394 5,524 26%
d. Grants-in-aid from the Centre 21,009 19,468 -7%
Of which GST compensation 3,546 3,834 8%
2. Capital Receipts 15,587 11,772 -24%
a. Borrowings 15,556 11,731 -25%
Expenditure (3+4) 53,460 50,192 -6%
3. Revenue Expenditure 36,011 38,491 7%
4. Capital Expenditure 17,449 11,701 -33%
i. Capital Outlay 5,692 6,013 6%
ii. Debt Repayment 11,396 5,334 -53%
Revenue Balance -423 -1,463 246%
Revenue Balance (as % of GSDP) -0.27% -0.85% -
Fiscal Deficit 6,445 7,789 21%
Fiscal Deficit (as % of GSDP) 4.12% 4.52% -
Note: A negative revenue balance indicates a deficit.
Source: Himachal Pradesh Budget Documents 2021-22; PRS.

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 Himachal Pradesh Budget Analysis 2021-22 PRS Legislative Research

Table 11: Key Components of State's Own Tax Revenue (in Rs crore)
% change from 2020-21
Tax 2020-21 RE 2021-22 BE
RE to 2021-22 BE
SGST 3,451 4,142 20%
Sales Tax/VAT 1,467 1,643 12%
State Excise Duty 1,624 1,868 15%
Taxes on Vehicles 372 488 31%
Stamps Duty and Registration Fees 235 311 32%
Taxes and Duties on Electricity 403 431 7%
Land Revenue 22 23 5%
Source: Himachal Pradesh Budget Documents 2021-22; PRS.

Table 12: Allocation towards Key Sectors (in Rs crore)

% change from 2020-21 RE
Sector 2020-21 RE 2021-22 BE
to 2021-22 BE
Education, Sports, Arts, and Culture 7,523 8,272 10%
Roads and Bridges 4,313 4,046 -6%
Health and Family Welfare 2,953 2,976 1%
Agriculture and Allied Activities 2,677 2,730 2%
Water Supply and Sanitation 2,080 2,243 8%
Social Welfare and Nutrition 2,055 2,128 4%
Police 1,501 1,527 2%
Rural Development 1,475 1,377 -7%
Irrigation and Flood Control 823 842 2%
Urban Development 841 728 -13%
Source: Himachal Pradesh Budget Documents 2021-22; PRS.
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